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Title:Does the tenure of private equity investment improve the performance of European firms? PDF Logo
Authors:Badunenko, Oleg
Baum, Christopher F.
Schäfer, Dorothea
Issue Date:2010
Series/Report no.:Discussion papers // German Institute for Economic Research 990
Abstract:The paper investigates whether the presence and tenure of Private Equity (PE) investment in European companies improves their performance. Previous studies documented the unambiguous merit of a buyout during the 1980s and 1990s for listed firms in the US and UK markets. This study analyzes such influences in both listed and unlisted European firms during 2002-2007. Our analysis suggests that shortterm PE investments have, on average, a detrimental effect on firm performance. The performance of a firm that has PE backing is lower than that of a firm without PE backing in the first year of PE investment. Such an effect disappears if PE investments remain in the firm for an uninterrupted six-year term.
Subjects:Private equity financing
corporate finance
JEL:M14
G24
G34
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
DIW-Diskussionspapiere

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